Billionaires Bill Gates and Craig McCaw have been tipped to rescue Iridium, the struggling global satellite phone network.
A report in a US newspaper said Iridium creditors had been told by Motorola, Iridium's largest shareholder, that McCaw may inject up to $300 million into the company. The creditors also said Microsoft chairman Bill Gates may also invest an undetermined amount in the company.
The two men are the driving force behind Teledesic, another satellite venture that would compete with Iridium when it goes live in 2004.
Motorola, which owns about 18 per cent of Iridium, has guaranteed a portion of its debt. But after months of financial problems, Iridium filed for Chapter 11, a move that protects it from bankruptcy, allowing it to continue to operate while it draws up a debt-repayment plan under court supervision.
Officials of Motorola told creditors of the possible investments at a meeting in New York City on Friday with executives of banks that lent $1.5 billion to Iridium, the report said. Motorola did not say how large a stake McCaw and Gates would get if they invest, the creditors said.
Spokespeople for Microsoft, Motorola and McCaw would not comment. However a spokesman for Teledesic said that the turbulance in the market had opened the door for partnerships and perhaps acquisitions. "Given the market as it exists today, that has opened up opportunities for us that we are exploring," he said.
Despite Iridium's struggles, many analysts believe the market for satellite phone services will be a lucrative one. Market research firm Dataquest expects more than 10 million satellite voice service subscribers by 2003.
Globalstar is among the leading challengers to Iridium. Globalstar officials have emphasised that the difference between their system and the failed Iridium system is in their constellation and engineering.
Shares of Iridium have been halted. They last traded at 4 1/4. Shares have traded as high as 49 7/8 in the past 52 weeks and as low as 2 3/4 in the same period of time.
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